The Discount Pharmacy

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Pharmacy Business Plan

Market Analysis Summary

The Discount Pharmacy's target market consists of two different groups, local customers or walk-ins, and mail order customers. 

The Discount Pharmacy will employ two different strategies to reach these two diverse market segments.

4.1 Market Segmentation

The Discount Pharmacy's customers can be broken down into two different groups, mail order customers and walk-in customers:

  • Mail order customers. This group of customers orders their medication through the mail in an effort to save money. Generally, the mail order customers are older in age, typically over 50. In general, elderly customers consume more medication relative to younger people. The mail order customer will typically purchase maintenance medications - prescriptions for an ongoing ailment that requires regular treatment. This group of customers will also be more likely to purchase several months of medication at once.
  • Walk-in customers. This group of customers are also looking for the lowest prices for their medication. However, they tend to purchase medications monthly at their local pharmacy, often at a higher price. There is not a common demographic for this group of people, other than living in the Portland metropolitan area. Some of these customers will pay for the medications out of pocket and some will submit a claim to their insurance company for reimbursement at a later date.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Walk-in customers 8% 345,887 373,558 403,443 435,718 470,575 8.00%
Mail order customers 9% 54,876,345 59,815,216 65,198,585 71,066,458 77,462,439 9.00%
Total 8.99% 55,222,232 60,188,774 65,602,028 71,502,176 77,933,014 8.99%

4.2 Target Market Segment Strategy

The Discount Pharmacy will seek to attract two different groups of customers and will thus have two strategies to attract them.

We anticipate that by far our largest group of customers will be those who order through the mail. These customers will be targeted through an advertising campaign in magazines and newsletters that have an older (>55) audience who regularly need medication and are aware in advance of their needs. For example, one of the main advertising vehicles will be the A.A.R.P monthly newsletter.

Walk-in customers will be targeted through advertisements in the local paper, "The Oregonian."  Ads will raise awareness for the The Discount Pharmacy and our low prices.

4.3 Competition and Buying Patterns

Competition takes many different forms in the pharmacy industry.

  • Chain pharmacies. These are state or national chains such as Rite-Aid.  The advantage to these chains are better prices through economies of scale, as well as personalized service.  The personalized service takes the form of the chain having a record of your medication purchases as well as any allergies that you have disclosed to them.

  • Local pharmacies.  These are the pharmacies where you typically know the pharmacist and they know your medical history.  This option is high in personalized service and convenience, and high in price.

  • Mail order and Internet pharmacies. These are similar to The Discount Pharmacy.

  • Canadian pharmacies. These pharmacies are located in Canada where the cost of drugs is lower than in the U.S.  These pharmacies can be accessed through mail order, the Internet, or via travel.  Recently there has been the trend for trips arranged for senior citizens in Northern States to travel up to Canada for the day to pick up their medicines.

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